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Medicare Backtracks Further on Average Wholesale Prices

Medicare Backtracks Further on Average Wholesale Prices

January 01, 2001

Medicare payment for chemotherapy administration has been a
controversial issue beyond accurate practice expense RVUs; a more inflammatory
side of the story involves the cuts in payments to oncologists for drugs they
purchase and then administer in their office.

There has been a positive
development here. On November 17, Medicare sent a program memorandum to
insurance carriers telling them to throw out a previous September 8 memorandum,
which had instructed carriers to start reimbursing physicians for office drugs
at lower prices set by the US Department of Justice. Some oncology and
hemophilia drugs were excluded from that edict; they were to be paid for, as in
the past, based on average wholesale prices, which are higher. Nonetheless,
there were still some cancer drugs included in the September 8 memo that would
have been reimbursed at the lower Department of Justice prices.

On November 17,
Medicare told insurance carriers to forget the earlier memo entirely and to keep
reimbursing all office drugs at 95% of the average wholesale price. Medicare
made that turnaround, even though the agency continues to believe average
wholesale prices are "inflated and inaccurate," because it feared
Congress would have reversed the September 8 memo soon after it went into effect
at the beginning of 2001, causing confusion. The American Society of Clinical
Oncology called the November 17 memorandum "an additional positive
step."

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